The comparability of the financial statements and the cost of capital

• Main Authors: Yun-Jung Tu, 杜昀容
• Other Authors: Kuei-Fu Li
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/15249638994422350086

碩士 === 銘傳大學 === 會計學系碩士班 === 102 === The aim of this study is to investigate the relationship between the comparability of the financial statements and the cost of capital. Using data from Taiwan listed firms between 2004 and 2011 and the measure of comparability developed by DeFranco et al. (2011), this paper documents a significantly negative relationship between the comparability of company and the expected cost of equity capital even after controlling for previously documented determinants of cost of capital. Otherwise, this paper also documents that firms with more comparable earnings enjoy a lower cost of debt capital. Overall, the results imply that higher comparability leads to a lower cost of capital since good earnings quality can mitigate the information asymmetry.